Health

FSA: Use it, don't lose it

Last minute ways to spend your flexible spending account before the end of the year

Dental student Eric Popp and dental assistant Sherry Ryan work on a patient during a visit by the University of Iowa College of Dentistry Geriatric Mobile Dental Unit (GMU) at Pleasantview Home in Kalona on Thursday, March 6, 2014. (Gazette file photo)
Dental student Eric Popp and dental assistant Sherry Ryan work on a patient during a visit by the University of Iowa College of Dentistry Geriatric Mobile Dental Unit (GMU) at Pleasantview Home in Kalona on Thursday, March 6, 2014. (Gazette file photo)

For those using a flexible spending account for their health care, the end of the year can sometimes sneak up more quickly than anticipated.

FSAs have their perks — namely, tax-free contributions and the ability to use funds for items not typically covered by health insurance.

“There is a significant opportunity to save,” said Brain Beck, director of operations at Auxiant, a full service third party administrator of health plans based in Cedar Rapids.

In fact, he said, if you have children in day care or recurring medical, dental or vision expenses, for example, you could save more than $2000 a year on taxes.

But FSAs also have pitfalls.

“It is important be aware of the rules to be sure you don’t leave any unused money in the account,” Beck said.

In some cases, if you don’t use the funds by the end of the year (Dec. 31) you’ll lose them. And as the end of the year quickly approaches, some FSA users are scrambling to cash in.

“Most people don’t want to waste the money,” said Barbara Hagen, Chief Operating Officer of Benefit Solutions in Cedar Rapids.

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Before panicking, though, Hagen recommends first checking with your employer to see if they offer any wiggle room.

According to federal guidelines, employers can give FSA users a two-and-a-half month grace period or allow up to $500 to roll over to the next year — but these options are not required. If this isn’t something your employer offers, Hagen suggested encouraging them to think about adding one.

“It gives a huge safety net,” she said.

“Why would you not do it? It’s such a great advantage to the employee and no extra work on the employer,” said Teri Copler, a benefit specialist at TrueNorth, an insurance and financial strategies company in Cedar Rapids.

If you do have FSA funds to spend, doing so last minute can sometimes be a challenge, but there are ways to do it. In fact, you may be surprised by the Internal Revenue Service’s wide-ranging list of eligible items.

For example:

l Has it been a while since you’ve had your teeth cleaned? Your eyes checked? Due for a physical exam? If you can get in for last minute doctor and dentist appointments, this can be a productive way to knock out some of the funds.

“A lot of doctors say their fourth quarter is busiest with people trying to use unused flex money or they’ve met their deductible so all their stuff is free,” Hagen said.

l Have you gotten your flu shot yet? No need to make a trip to the doctor for this one — you should be able to get the injection or nasal spray at a local pharmacy.

l Go through your medicine cabinet. Maybe you have some expired medications you can restock — but beware, over-the-counter medicines are no longer eligible unless prescribed by a doctor.

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l Stock up on sunscreen for the summer — as long as it’s SPF 15 or more, it’s FSA eligible.

l Build a first aid kit. Eligible items include bandages, blood pressure monitors, thermometers, joint braces, heat wraps, cooling pads and cold compresses.

l Prefer alternative medicine? Acupuncture and chiropractor visits are also eligible.

l Did you travel for medical care this year? Some transportation costs — mileage, gas, bus or train tickets, taxi or plane fare, ambulance rides and parking fees and tolls — can be expensed if you have a record of the date, type of visit and starting and ending mileage.

l Get a new pair of eyeglasses or prescription sunglasses. Reading glasses are included, too. Not into frames? Stock up on contact lenses for the year ahead, Hagen suggested. Or, if you want to ditch lenses all together, vision correction surgery — such as LASIK — is also an option.

l Are you a smoker and interested in quitting? “If that’s on your New Year’s list of things to take care of,” Hagen said, you can use your FSA for smoking cessation programs. However, nicotine gum and patches designed to help quit are not included.

l Need to lose weight for medical reasons? If diagnosed by a physician with obesity, hypertension or heart disease, the IRS will accept expenses for medical treatments to lose weight. This doesn’t include gym or health club memberships, but does include membership to a weight reduction group or attendance of weight loss meetings, for example. Diet food and beverages are not included unless the food is prescribed by a physician and is used to treat an illness.

l Have diabetes? Insulin, monitors, test kits, strips and supplies are all eligible.

l If you’ve lost your hair due to disease (cancer, for example), you can use your FSA to purchase a wig.

l Trying to get pregnant? Fertility monitors and treatments are included. Or if you’re trying to prevent pregnancy, stock up on condoms or other contraceptives. Grab some pregnancy tests, too, just in case.

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l If you’re already pregnant, consider purchasing breast pumps and other supplies. Breastfeeding and childbirth classes are also eligible.

These are just some ways you can spend your FSA. For a comprehensive list, visit irs.gov. Another resource people may find useful is fsastore.com, an online marketplace of FSA eligible items.

“It’s really easy to use,” Copler said, describing the site as an Amazon or eBay for FSA items. She suggests shopping locally not only to support the local economy but also to potentially save money, but fsastore.com is “a great place to see what all you can buy using your FSA money,” she said.

“There is really no reason to lose that money,” she added.

All expenses purchased with FSA funds need to be substantiated with a receipt or documentation of the expense details — so hang on to your receipts and submit them before your deadline.

Some people find an FSA to be their best option for funding health related expenses. Beck, for example, said “it’s a huge tax advantage” and believes “everybody should be participating to some degree,” especially if their employer offers a grace period or allows funds to roll over.

But it may not be for everyone. If you find yourself scrambling to spend your FSA year after year, you may want to consider a Health Savings Account (HSA) instead, suggested Hagen.

“If you have a choice between FSA and HSA, then lean toward HSA for sure,” Hagen said. “It’s a better place to put your money.”

Like an FSA, an HSA still offers a tax-free investment, but allows rollover year to year. However, HSAs are usually only offered with high-deductible health plans and not all employers offer them.

If you do stick with an FSA, now is the time to be thinking about how much to elect for next year.

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Hagen advised people “be very conservative” and budget according to their health and lifestyle.

“Plan ahead,” Copler agreed, suggesting people underfund their account rather than put too much in.

“It’s better to run out in March than still have money left over in December,” she said. “There are quite a few things you can do with it, but the big thing is to get the money out. Don’t lose it.”

l Comments: (319) 398-8364; elizabeth.zabel@thegazette.com

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